An aerial view of homes east of Toronto. Equifax Canada found that homeowners with more than 11,000 mortgages in Ontario recorded a missed payment in the fourth quarter,Lars Hagberg/The Canadian Press
More Ontario homeowners are missing their mortgage payments, according to new data, which suggests they are struggling with higher rates when they renew their loans.
The province had a mortgage delinquency rate, in which a homeowner has not made a payment for at least 90 days, of 0.22 per cent, according to credit reporting agency Equifax Inc. EFX-N That is up from 0.19 per cent in the third quarter and 0.12 per cent in the fourth quarter of 2023.
Even though the Bank of Canada has aggressively cut interest rates over the past seven months, the data suggest that borrowing costs are overwhelming homeowners who are still facing higher rates upon renewal than they had when they took out mortgages several years ago.
“Our numbers are telling us that there are more consumers struggling,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. “We are not seeing delinquency rates slowing.”
Equifax found that homeowners with more than 11,000 mortgages in Ontario recorded a missed payment in the fourth quarter, foreshadowing an increase in the 90-day delinquency rate this year. The credit reporting agency said mortgage holders who are falling behind in their payments are also carrying large mortgage balances.
The average balance for a new mortgage in Ontario was $434,744 at the end of last year. The national average, including renewals, was $344,928.
“There are more consumers with higher balances that will see a bigger increase in payments,” Ms. Oakes said.
The financial shock at renewal is not as severe as it could have been. Since June, the central bank has reduced its benchmark interest rate to 3 per cent from 5 per cent.
Five-year fixed-rate mortgages had an average interest rate of around 4.29 per cent at the end of 2024, compared with 5.22 per cent a year earlier, according to data from Mortgagelogic.news. And five-year variable-rate mortgages, where the interest rate typically moves with the central bank’s benchmark interest rate, had an average interest rate of 4.5 per cent at the end of last year, down from 6.23 per cent at the end of 2023.
However, that is still significantly higher than during the pandemic years, when mortgage rates were below 2 per cent.
During the 2020 to early 2022 period, demand for residential real estate boomed because mortgages were so cheap. The increased competition sent home prices soaring. In Ontario, the typical home price jumped more than 70 per cent to a peak of $1,070,400 in early 2022. Home prices have since declined, but the typical home price is still nearly 40 per cent higher than in early 2020.
Because buyers overextended themselves during the pandemic years, homeowners with relatively larger mortgages are facing higher monthly payments.
Equifax found that Toronto and London had higher mortgage delinquency rates than the province as a whole, with rates of 0.23 per cent and 0.27 per cent respectively.
The mortgage pain is expected to get worse this year. Canada Mortgage and Housing Corp. estimates that more than one million fixed-rate mortgages across the country are up for renewal in 2025.